ALJDEC decisions subject to certification as final

2012A-4385-ROC · Registrar of Contractors · 2013-05-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 24, 2013, at 8:15 a.m. APPEARANCES: Complainants Gus and Karen Chengelis appeared on their own behalf; Respondent D C M Builders LLC appeared through Craig Allen Boyd, its qualifying party and member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. The Arizona Registrar of Contractors (“the Registrar”) issued License No. B.215117-R to D C M Builders LLC (“Respondent”). 2. Gus and Karen Chengelis (“Complainants”) filed a Complaint with the Registrar that alleged that Respondent had performed deficient work and had abandoned its contract to complete framing on the house that they were building at 14925 North Burnside Drive in Prescott, Arizona. Complainants stated in the Complaint that they had paid Respondent $1,500.00 and that they still owed Respondent $1,500.00. 3. Complainants responded to the question on the complaint form, “What do you want the contractor to do to resolve your complaint?” as follows: Nothing. He abandoned the job and we have hired another contractor to finish. His attitude [at] this point has upset our other contractors & we do not want him back on the job.

4. Complainants subsequently informed the Registrar that Respondent had not resolved their Complaint and requested that the Registrar issue a citation against Respondent. 5. On or about December 28, 2012, the Registrar issued a Notice that informed the parties as follows: On or about September 7, 2012, Complainants filed a Complaint with the Registrar alleging deficient workmanship and abandonment by Respondent. On their Complaint Form, Complainants indicated that they had hired another contractor to finish the work.

In view of Complainants’ admitted modification of Respondent’s allegedly deficient workmanship, the Registrar has determined that the issuance of a Citation and Complaint for failure to perform work in a professional and workmanlike manner or in accordance with applicable building codes is prohibited by A.R.S. § 32-1155(C), which states:

The registrar shall not issue a citation for failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards if either: (1) The contractor is not provided an opportunity to inspect the work within fifteen days after receiving a written notice from the registrar. (2) The contractor’s work has been subject to neglect, modification or abnormal use.

Accordingly, the Registrar will not issue a Citation and Complaint alleging a violation of A.R.S. § 32-1154(A)(2) or A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and Complainants will be precluded from presenting any evidence and testimony at an administrative hearing, if one is held, with regard to Respondent’s allegedly deficient workmanship.

The Registrar will allow Complainants to proceed with this matter as it relates to other alleged violations of A.R.S. § 32- 1154(A) where A.R.S. § 32-1155(C) does not preclude the Registrar from issuing a Citation and Complaint.

6. On or about January 15, 2013, the Registrar issued a Citation and Complaint against Respondent charging a possible violation of A.R.S. § 32-1154(A)(1). 7. Respondent filed a timely written answer to the Citation and Complaint denying any statutory violation and affirmatively alleging that it had substantially completed the work set forth in its contract and that Complainants had refused to pay the remaining monies owed under the contract. 8. The Registrar referred the matter to the Office of Administrative Hearings, an independent State agency, for an evidentiary hearing. A videoconference hearing was held from the Registrar’s office in Flagstaff, Arizona on April 24, 2013. 9. Complainants submitted 34 exhibits and presented the testimony of three witnesses: (1) Mrs. Chengelis; (2) Mr. Chengelis; and (3) Christopher J. MacIntyre, the qualifying party and an officer of Green Acres Development Inc., License No. B.190058-R (“Green Acres”), whom Complainants hired to help complete the project. Respondent submitted three exhibits and presented the testimony of two witnesses: (1) Mark Clark, Respondent’s foreman on Complainants’ project; and (2) Craig Allen Boyd, Respondent’s qualifying party and member. Hearing Evidence 10. Complainants’ primary residence is in Mesa, Arizona. They were building the residence in Prescott as a vacation home. 11. Complainants were listed on License No. C-61.171812-R for residential limited remodeling and repair contracting issued to C and C Painting and Maintenance Inc. That license is inactive. Complainants currently operate a rental business called GKC Properties from their residence in Mesa. Mrs. Chengelis is a real estate agent and property manager in the business. Mr. Chengelis performs repair and maintenance on GKC Properties’ rental properties. 12. Complainants acted as their own general contractor in the construction of the vacation home in Prescott. Mrs. Chengelis testified that although Complainants understand remodeling and repair, they do not have any previous experience in new construction. 13. The first framer that Complainants hired to work on their vacation house in Prescott was Greg Rosamond, an unlicensed contractor. Between May 4, 2012, and June 12, 2012, Complainants paid Mr. Rosamond $3,800.00. Mrs. Chengelis testified that when Mr. Rosamond he demanded more money to complete the project, Complainants terminated his employment. 14. The second framer that Complainants hired to work on the vacation house in Prescott was Thomas Hunt, an unlicensed contractor. On June 20, 2012, Complainants paid Mr. Hunt $350.00. Mrs. Chengelis testified that because Mr. Hunt’s workmanship was so poor, Complainants quickly terminated his employment and sought another framer to repair and complete his work. 15. Complainants submitted an e-mail dated July 8, 2012, from David Thomas, an unlicensed contractor, that Mrs. Chengelis testified set forth the scope of work that she understood that Respondent would perform on their vacation home in Prescott, including window and door framing, framing the porch roof, installing steel in the dining room, and repairing short rafters in the utility room. 16. Mr. Boyd testified that when he discussed with Mr. Chengelis the possibility that Complainants might hire Respondent to complete framing on the project, the framing was in bad shape. Mr. Clark testified that the condition of the framing was such that Complainants would have been better of tearing the unfinished house down and starting over. 17. On or about July 10, 2012, Respondent submitted a proposal to Complainants to perform the following work on their vacation house in Prescott that provided in relevant part: Finish and repair all framing . . . in order to pass county frame inspection. Owner agrees to provide all material and contractor agrees to provide all labor. All work shall be in accordance to local building codes and as per plan indicates. Price shall be $3000[.] Terms shall be 50% down balance due upon the county building inspector signing off on framing portion. The framing will be completed no later than 8/1/2012 as long as the material is at the job location. Framing & trim to be as we discussed[.][1]

On or about July 10, 2012, Mr. Chengelis signed Respondent’s proposal to accept it and Complainants paid Respondent $1,500.00 to start repairing and completing the framing on the job. 18. Mr. Boyd testified that Respondent contracted to perform work according to building codes, approved plans, and manufacturer’s specifications. Mr. Boyd testified that Respondent did not contract to complete installation of the windows because when Respondent submitted its proposal to Complainants, the windows were used, did not match, and could not be repaired to conform to the current plans, the manufacturer’s specifications, or code. 19. Mr. Clark testified that the windows on the house were used and that the transom windows did not match the lower windows. Mr. Clark testified that Mr. Chengelis wanted Respondent to pop out the windows so that they were not resting on any load-bearing wall, contrary to plans and applicable building code. 20. On or about July 30, 2012, Yavapai County Development Services Building Inspector, Jimmy Higgs, issued a Correction Notice that stated the windows were not installed per the manufacturer’s specifications, that the windows were used and missing nail fins, and that the County required as-built plan details approved by an engineer to approve certain deviations from the approved plans.[2] 21. Mrs. Chengelis testified that Mr. Higgs’ statement on the July 30, 2012 Correction Notice that the windows were used was mistaken. Complainants submitted their order form dated August 26, 2012, to Pella Windows & Doors Mountain West for 3 blue fins and 5 brown OSMC to repair the windows.[3] 22. Mr. Clark testified that Mr. Chengelis asked Respondent’s crew to perform work that consisted of hanging iron railings for installation of fans and lights. Mr. Clark testified that this work was outside the scope of Respondent’s contract, but that the crew performed the work so that Respondent would get paid the remaining amount due under its contract. 23. Mrs. Chengelis acknowledged that Respondent performed some work that was beyond the scope of its contract. Mrs. Chengelis testified that Complainants were willing to pay Respondent for this work, but that Respondent overstated the size of its crew and the time that the crew spent helping Mr. Chengelis. 24. On Friday, August 17, 2012, Complainants issued a check to Respondent in the amount of $1,000.00. 25. Mr. and Mrs. Chengelis both testified that Complainants issued the check because Mr. Boyd promised to have his crew work all weekend to complete remaining framing, including completing installation of the windows. 26. Mr. Boyd testified that at the time the check was issued, Respondent had performed most of the framing that it had contracted to perform. Mr. Boyd testified that the $1,000.00 was a progress payment on the remaining $1,500.00 due under the contract for framing for framing. Mr. Boyd testified that Respondent agreed that Complainants could hold back $500.00 for any framing repairs that were required to pass Yavapai County’s final inspection. 27. Mrs. Chengelis testified that after her neighbors in Prescott informed her that Mr. Boyd had left the property shortly after Complainants tendered the check and Respondent’s crew had not worked on the vacation house over the weekend, she placed a stop payment on the check. 28. Mrs. Chengelis submitted Mr. Boyd’s August 23, 2012 e-mail threatening to file suit against Complainants for nonpayment because “I can bring the county inspectors in to testify the framing is complete as per plan.” Mrs. Chengelis pointed to her statement in her e-mail in response that “you did install 3 windows on the east side of the home correctly on Friday August 17 when we gave you the check” as evidence that Respondent contracted to install the windows.[4] 29. Mr. Boyd acknowledged that Respondent did install two arched windows, but testified that it only did so in an effort to get paid. Mr. Boyd testified that although Respondent was willing to install the windows to get paid, Mr. Chengelis did not want the rest of the windows installed according to code, plans, and the manufacturer’s specifications. 30. Mr. MacIntyre testified that he was aware of the dispute between Complainants and Respondent but that he did not know the scope of Respondent’s contract. Mr. MacIntyre testified that Green Acres performed work on Complainant’s project after Respondent was no longer involved and that he did not push Respondent off the job so that Green Acres could make money. 31. Mr. MacIntyre testified that he was friends with Complainants. Mr. MacIntyre testified that in April or May 2012, he submitted a proposal for Green Acres to perform the framing on the project, but that apparently the price was too high because Complainants did not accept the proposal. Mr. MacIntyre testified that after Complainants’ dispute with Respondent arose, Complainants hired him to repair and complete construction of the vacation home, including some framing, at a rate of $20.00/hour. 32. Mr. MacIntyre testified that he had a meeting with Yavapai County Building Inspector Higgs and that Green Acres performed work to allow the project to pass the Mr. Higgs’ final inspection, including installation of the windows. Mr. MacIntyre acknowledged that at the August 28, 2012 Yavapai County inspection, Inspector Higgs stated that the framing looked good, except for a small repair to the pony wall. Mr. MacIntyre also acknowledged that the main reason that the house did not pass Mr. Higgs’ August 28, 2012, was that substantial additional plumbing and electrical work needed to be performed. 33. Mr. MacIntyre acknowledged that two of the windows that were set in the house had been pulled out of sales displays and had foam sealing on them, that the upper and lower windows did not match, and that the windows had not been installed according to the manufacturer’s specifications or the approved plans. 34. On or about September 12, 2012, Complainants’ architect provided modified details for the joist hangers, framing of windows, hangers at the rafters, sill framing, and ledger framing to amend the plans in response to Yavapai County Development Services’ August 28, 2012, Correction Notice.[5] 35. Mrs. Chengelis testified that Mr. MacIntyre and Mr. Chengelis repaired and completed framing that was necessary to pass Yavapai County Development Services’ final inspection. 36. Mr. MacIntyre acknowledged that his invoices to Complainants for Green Acres’ work on the project included substantial work in addition to framing. 37. On or about September 19, 2012, Yavapai County Development Services approved Complainants’ architect’s corrections and the vacation house passed Mr. Higgs’ final inspection of all trades’ work, including framing. 38. Complainants asked the Registrar to require Respondent to pay them $2,396.33 to avoid discipline against its license. This amount included the $30.00 stop payment fee on Complainants’ August 17, 2012 check for $1,000.00, the time that Mr. Chengelis allegedly spent performing framing work, at a rate of $42.00/hour, $901.00 that was paid to Green Acres, and $373.33 for interest expense for one month’s delay in construction. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction to determine whether Respondent violated A.R.S. § 32-1154(A)(1). 2. Complainants bear the burden of proof to establish that Respondent abandoned the project in violation of A.R.S. § 32-1154(A)(1) by a preponderance of the evidence.[6] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[7] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[8] 3. Respondent established that it only contracted to perform framing that could be completed in accordance with existing plans, the manufacturer’s specifications, and building code, that it substantially completed the framing work that it contracted to perform, that most of the framing work about which Complainants complained could not be completed until Complainants’ architect modified the plan details, that in any event, Yavapai County would not pass the final inspection of the vacation house until other trades performed substantial work, and that Complainants refused to pay Respondent for its work pursuant to the parties’ contract. 4. Because these circumstances legally justified Respondent’s refusal to perform minor repairs to complete its scope of work under its contract or to perform additional work that was beyond the scope of its contract, Complainants did not carry their burden to establish that Respondent abandoned the contract in violation of A.R.S. § 32- 1154(A)(1).[9] The parties may resolve their financial claims against each other in a court of competent civil jurisdiction. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, Complainants Gus and Karen Chengelis’s Complaint in Case No. 2012-4385 against Respondent D C M Builders LLC’s License No. B.215117-R shall be dismissed. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the date of that certification. Done this day, May 13, 2013.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Complainants’ Exhibit C-6; Respondent’s Exhibit R-1 (A). Respondent also proposed to install siding and trim work for an additional price of $1,500.00 when it completed the framing. As set forth below, the parties’ relationship broke down before Respondent could perform the second part of its proposal. [2] See Complainants’ Exhibit C-7. [3] See Complainants’ Exhibit C-10. [4] See Complainants’ Exhibit C-36. [5] See Complainants’ Exhibit C-16. [6] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [7] See A.A.C. R2-19-119(B)(2). [8] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [9] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826